Service tax Applicability

You have to charge service tax on the entire amount of taxable service extended and NOT on the amount exceeding the exemption limit.

thnks...

can u plz tell me the section no. or notification or any circular reference for the same....

In the previous financial year if a person is having taxable service of 10 lacs then in the current financial year, he need to pay service on the amount exceeding rs.10 lacs. and if in the previous FY, the taxable services crossed rs.10 lacs, then he need to collect and pay service tax on whole amount.

in my case the assessee has started providing taxable services in the year 2007-08 and has not yet applied for registration. turnover is more than 25 lacs now i wanted to know that whether he should pay service tax on all 25 lacs or on 25-8 = 17 lacs (8 lacs exemption limit)

A   scheme of small scale exemption in service tax was introduced by way of Notification No. 06/2005-ST dated March 1, 2005, w.e.f. April 1, 2005, exempting from service tax such aggregate value of taxable services not exceeding Rs 4 lakh received by the service provider during a financial year.

Service tax will be payable only on the amounts over and above Rs 4 lakh, that is, the first Rs 4 lakh shall be exempt from service tax. In the next year, if the preceding year's turnover exceeded the threshold limit, the exemption cannot be used even if the value of services is less than Rs 4 lakh in that year because the eligibility has to be considered with respect to previous year.

However, in Budget-2007, the Finance Minister has raised the threshold exemption limit for the small service providers available under Notification No. 6/05-ST from the existing ‘rupees four lakhs’ to ‘rupees eight lakhs’ w.e.f. 1.4.2007. Thus, the eligibility limit i.e. the aggregate value of the taxable services in the preceding financial year has also been raised from ‘rupees four lakhs’ to ‘rupees eight lakhs’ by suitably amending the notification No. 6/05-ST.

The above amendments to Notification No. 6/05-ST have been made vide Notification No. 4/07-ST dated 1.3.2007 effective from 1.4.2007.

In other words, the eligible service providers, whose aggregate value of taxable services  does  not exceed  rupees eight lakhs in the current financial year i.e. 2006-07, shall be eligible to the exemption upto rupees eight lakhs in the next financial year commencing from 1.4.2007.

The annual threshold limit of service tax exemption for small service providers has been increased from Rs.8 lakh to Rs.10 lakh.

Pls can anyone tell me what was the service tax exemption limit for FY2003-04

Neha

Exemption for small service provider first time came in Budget 2005 and that time limit was 4 Lakhs.

See Notification No. 6/2005.